コーポレートガバナンスtdnet-pdf.kabutan.jp/tdnet/data/20200730/...2020/07/30 ·...

コーポレートガバナンス CORPORATE GOVERNANCE

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Last modified: July 29, 2020

DIP Corporation

Representative: Hideki Tomita,

Executive President and Chief Executive Officer (CEO)

Contact: +813-5114-1177

Stock code: 2379

https://www.dip-net.co.jp/en/

Corporate governance at DIP Corporation is as follows:

I. Basic Approach to Corporate Governance and Capital Structure, Corporate Attributes and Other

Basic Information

1. Basic Approach (Revised)

As a “General trading company dealing in labor force” that provides personnel recruiting services

as well as AI/RPA, DIP promotes a vision of becoming a “Labor force solution company” under the

corporate philosophy of “tapping into dreams, ideas and passion to create a better society.”

To realize the vision, it will be essential to ensure effective corporate governance. DIP aims to

improve its medium/long-term corporate value by enhancing management transparency and

efficiently running the company under a robust corporate governance system, while fulfilling its

responsibilities to all stakeholders.

DIP adopts a system of corporate governance carried out by the Board of Directors, corporate

auditors and the Audit & Supervisory Board, with the aim of simultaneously achieving sustainable

business operations and enhanced audit and internal control functions, while working to effectuate a

corporate management that is able to swiftly address changes in the management environment. DIP

has adopted this system because it believes that it is preferable for some of its board directors to be

involved in important business executions to make effective use of its managerial resources and

maintain sustainable business operations. At the same time, the system should, from the perspective

of ensuring management soundness, preferably enable non-executive directors to supervise

executive directors and corporate auditors to audit business management.

As DIP appoints independent external board directors as non-executive directors, it has set up a

support system, such as providing extensive prior briefings of the agendas of Board of Director

meetings, so that such directors can exercise their abilities and knowledge to the fullest extent. DIP

has also established an optional Nomination and Compensation Committee as an advisory body to

the Board of Directors. The committee deliberates and reports on matters concerning the nomination

and compensation of board directors in response to requests from the Board of Directors. The majority

https://www.dip-net.co.jp/en/


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of the members consist of independent external board directors to ensure the impartiality of the

committee.

With respect to audit functions, corporate auditors including independent external auditors attend

important meetings such as Board of Director meetings and conduct effective audits by cooperating

with the independent auditor and the Internal Audit and Control Office to ensure sound corporate

management. Furthermore, DIP has introduced an executive officer system to expedite decision-

making and ensure its smooth execution, contributing to the establishment of a system that is able to

swiftly address changes in the management environment.

DIP is determined to continue its efforts to pursue healthy and transparent corporate management

and further improve and enhance its corporate governance in the future.

[Reason for Not Implementing the Principles of the Corporate Governance Code] (Revised)

[Principle 3.1 (i) (Disclosure of Company Objectives (e.g., Business Principles), Business

Strategies and Business Plans)]

[Supplementary Principle 4.1.2 (Mid-Term Business Plan)]

[Principle 5.2 (Establishing and Disclosing Business Strategies and Business Plans)]

DIP discloses its corporate philosophy and vision on its website to share its long-term goals with

shareholders and investors.

https://www.dip-net.co.jp/en/company/philosophy

DIP has also established a medium/long-term management strategy as well as internal performance

targets. It has not disclosed medium/long-term quantitative targets at the moment, since doing so

under a business environment that includes many variable factors may lead to misjudgment on the

part of shareholders and investors. However, it will continue to consider the appropriate method of

disclosure and communication that will help shareholders and investors in their investment decisions

while updating its current management strategies at the same time.

[Disclosure Based on the Principles of Japan’s Corporate Governance Code] (Revised)

[Principle 1.4 (Cross-Shareholdings)]

DIP does not hold shares for the purpose of cross-shareholding simply for the objective of

deepening business relationships.

[Principle 1.7 (Related Party Transactions)]

Any related party transactions DIP conducts require prior reporting to and approval of the Board of

Directors in accordance with DIP’s Related Party Transaction Guidelines. When the Board of Directors

deliberate approval of the transactions, it compares the details with general business conditions to



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prevent the transaction from being disadvantageous to DIP or arbitrary. Individuals who conducted a

related party transaction must report the transaction details to the Audit & Supervisory Board to receive

an audit on the legality of the transaction.

Furthermore, DIP requires its board directors and corporate auditors to submit a Confirmation on

Related Party Transactions on a quarterly basis to guarantee the effectiveness of the above

restrictions.

[Principle 2.6 (Roles of Corporate Pension Funds as Asset Owners)]

DIP has not introduced corporate pension funds.

It has introduced a defined contribution pension system and provides education and training to its

employees by holding internal seminars on asset formation and investment management.

[Principle 3.1 (Full Disclosure)]

DIP actively discloses information, recognizing the disclosure of useful information for shareholders

and other stakeholders as an important managerial issue.

(1) Under a corporate philosophy of “tapping into dreams, ideas and passion to create a better

society,” DIP will strive to continuously develop its business and contribute to society by gaining

sympathy from shareholders and other stakeholders toward DIP’s ideas and corporate attitude. Since

2019, DIP has adopted a new vision of becoming a “Labor force solution company” as a “General

trading company dealing in labor force.” Please refer to the following link for DIP’s corporate

philosophy and vision.


(2) Please see “Basic Approach to Corporate Governance” for DIP’s basic approach and basic policy

on corporate governance.

(3) The basic policy of the compensation system for DIP’s management and board directors, which

excludes external board directors and auditors who are independent and are expected to perform

oversight and supervisory functions, is to share value with shareholders, taking into consideration a

sufficient level for retaining competent personnel while maintaining objectivity and transparency that

enable full accountability, and promote sustainable growth of the Company and medium/long-term

increase in its corporate value through a sound entrepreneur spirit. The amount of compensation is

decided by a resolution of the Board of Directors in view of the opinions of the Nomination and

Compensation Committee, an optional advisory body where independent external board directors



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account for a majority of votes.

[Executive director]

Compensation for DIP’s executive directors consists of cash compensation as the base

compensation and a BIP (Board Incentive Plan) trust as a performance-linked stock compensation,

which is aimed at emphasizing the link between compensation and DIP’s share value and bolstering

executive directors’ awareness toward contributing to medium/long-term performance and corporate

value improvement. The decision of the percentage of performance-linked stock compensation in

directors’ compensation is based on a comprehensive review of the medium/long-term ratio of

performance-linked stock compensation to annual compensation and the difficulty of achieving

performance targets, after conducting an objective comparison that takes DIP’s business scale into

consideration, using a remuneration database aggregated and analyzed by an external specialist

institution.

[External board director and auditor]

Compensation for external board directors and auditors consists solely of cash compensation as

the base compensation, in principle, to ensure the effectiveness and independence of supervision and

audit.

(4) The appointment of DIP’s board directors and corporate auditors is decided by a resolution of the

general meeting of shareholders in response to a proposal of candidates nominated by a resolution

of the Board of Directors in view of opinions of the Nomination and Compensation Committee, an

optional advisory body where independent external board directors account for a majority of votes,

after the Executive President and Chief Executive Officer (CEO) or another board director refers the

candidates to the Board of Directors after confirming that the candidates meet the basic policy for

appointment stated below. The proposal on the appointment of corporate auditors is submitted to the

general meeting of shareholders after obtaining the consent of the Audit & Supervisory Board.

[Board director]

DIP’s basic policy for appointing executive directors requires the candidates to possess broad

knowledge and experience necessary for making managerial decisions and to have track record and

insight in the areas and operations required to supervise business management of the Company.

In appointing external board directors, the candidates are required to be able to monitor and

supervise business management of the Company through important decision-making at the Board of

Directors meetings, oversee whether there is any conflict of interest between the Company,

management and controlling shareholders, and actively make recommendations on management

policies and management improvements in order to improve medium/long-term corporate value. The

basic policy is to appoint at least two independent external board directors upon considering and


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deciding the appropriate balance of the diverse knowledge and experience expected of such directors.

[Corporate auditor]

DIP’s basic policy for appointing corporate auditors requires the candidates to possess extensive

expertise and experience as tax accountants, certified public accountants, lawyers, company

managers, etc., with the aim of reinforcing oversight and supervisory functions.

The dismissal of board directors is decided by a resolution of the general meeting of shareholders

after the candidate for dismissal is decided by a resolution of the Board of Directors upon timely and

appropriate deliberation in view of the basic policy on the appointment of board directors. The

dismissal of corporate auditors is also decided by a special resolution of the general meeting of

shareholders after the candidate for dismissal is decided by a resolution of the Board of Directors

upon timely and appropriate deliberation in view of the basic policy on the appointment of corporate

auditors.

(5) The reasons for the appointment or dismissal of board directors or corporate auditors will be

reported in the notices of convocation of annual general meetings of shareholders and securities

reports.

[Principle 4.1.1 (Matters for Resolution by the Board and Scope of Delegation)]

DIP specifies in its Board of Director Regulations what matters must be decided by a resolution of

the Board of Directors. Specifically, they include matters concerning the general meeting of

shareholders, results, shares, bonds and stock acquisition rights, budgets and business plans, human

resources and the organization, disposal or succession of important properties beyond a certain

amount, large amounts of funds and assets such as investment and loans, subsidiaries and affiliates,

and matters stipulated by law such as the Companies Act or any equivalent matters.

DIP conducts prompt and bold decision-making by delegating authority over business execution to

its representative director and executive directors. It has introduced an executive officer system and

also delegates business execution authority to such officers with the aim of reinforcing corporate

governance and expediting decision-making and execution. DIP will continue to improve its business

execution system by considering authority delegation that suits the scale, importance and risks of the

transaction.

Matters concerning business strategies are deliberated at regular Executive Officer Meetings

attended by executive directors as well as at councils at the headquarters consisting of department

heads and higher to recognize managerial issues at an early stage and deepen discussions before

being submitted to the Board of Directors.


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[Principle 4.9 (Independence Standards and Qualification for Independent Directors)]

For independent external board directors to fulfill their oversight and supervisory functions, DIP has

established Standards on Independence of External Officers, which are discloses in this Corporate

Governance Report, etc.

In addition to independence requirements, DIP nominates individuals with expertise in business

strategy who can engage in frank, active and constructive deliberations at Board of Directors meetings

as candidates for independent external board directors. After their appointment, independent external

board directors have actively made recommendations at Board of Directors meetings to improve

medium/long-term corporate value in terms of management policies and management improvements.

[Principle 4.11.1 (Preconditions for Board Effectiveness)]

DIP’s Board of Directors consists of executive directors, who have deep knowledge of the

Company’s businesses and operations and can conduct agile business execution, and external board

directors who can be expected to provide advice and supervision concerning business management

of the Company based on a high level of expertise and a broad perspective. The diversity and

appropriate size of the Board is also taken into consideration upon the determination of the directors.




In appointing external board directors, DIP’s basic policy is to appoint at least two independent

external board directors upon considering and deciding the appropriate balance of independent

directors with extensive experience as a company manager and those with extensive experience in

his/her field of expertise.

DIP’s Board of Directors is well balanced and also diverse in terms of knowledge, experience and

capabilities as a result of appointing directors from diverse backgrounds and age groups. Active

discussions have promoted in-depth examinations and swift decision-making, enabling the Board to

function the most effectively and efficiently.

[Principle 4.11.2 (Concurrent Positions of External Officers)]

DIP’s two independent directors do not concurrently serve as officers of other listed companies.

They are vigorously engaged in their duties at the Company, such as actively making

recommendations on the Company’s business at external board director and auditor meetings,

officers’ management meetings and the Nomination and Compensation Committee. One of DIP’s two

external auditors concurrently serve as external board directors of three listed companies; however,

we believe this to be a reasonable number of listed companies to concurrently serve as officer. The

external auditor has attended more than 90% of DIP’s Board meetings and vigorously works to


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improve DIP’s corporate value through supervisory or audit of the Company. The concurrent positions

of DIP’s directors and auditors as officers in other listed companies are stated in the Notice of

Convocation of Annual General Meeting of Shareholders and Securities Reports on the Company’s

website.

[Supplementary Principle 4.11.3 (Evaluation of Board Effectiveness)]

Every fiscal year, DIP evaluates the effectiveness of the Board of Directors as a whole to check the

status of functions of the Board and improve its effectiveness. During the fiscal year ended February

2020, DIP conducted self-evaluation in discussion form as in the previous fiscal year.

Furthermore, DIP held an External Board Director and Auditor Meeting to assess from an objective

perspective whether the Board was functioning appropriately. The External Board Director and Auditor

Meeting comprises three independent external board directors and four auditors and aims to maintain

highly effective supervisory functions at the Board of Directors. The analyses and evaluations made

in the External Board Director and Auditor Meeting were reported at a meeting attended by all board

directors.

[Principle 4.14.2 (Disclosure of Training Policy for Directors and Auditors)]

DIP provides its board directors with the opportunity to participate in internal trainings by DIP as

well as external seminars. The internal trainings are aimed at enabling sustainable growth at DIP and

invite experts to lecture on themes that could become medium/long-term issues, about which board

directors and corporate auditors carry out discussions.

Board directors also strive to acquire and enhance their knowledge by holding regular Officers’

Management Meetings and through discussions, mainly by external board directors, on management

strategies and social situations.

DIP provides DVD recordings and video streaming of internal trainings to ensure any director or

auditor who could not participate in the training on the day can acquire or enhance their knowledge.

Furthermore, DIP assists corporate auditors in joining the Japan Audit & Supervisory Board

Members Association so that they can acquire expertise that enables them to perform their roles and

authority required of their position through participation in trainings hosted by the association.

[Principle 5.1 (Disclosure of Policies concerning Organizational Structures and Measures for

Constructive Dialogue with Shareholders)]

DIP recognizes interactive communication with shareholders and investors, its key stakeholders, to

be essential for DIP’s sustainable growth and medium/long-term corporate value improvement. Based

on this recognition, DIP has been enhancing information disclosure on its website and disseminates

information about its management strategies and business environment to deepen stakeholders’


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understanding. Furthermore, the Executive President and CEO and the board directors and executive

officers in charge of the IR section carry out results presentation and individual meetings with

shareholders and investors. The opinions and requests obtained through dialogue with shareholders

and investors are compiled by the IR section and reported to management or within the Company on

a regular basis.

2. Capital Structure

Percentage of shares held by foreign investors

(Revised)

More than 20% but less than 30%

[Major Shareholders] (Revised)

Name Number of shares held Percentage

EKYT Corporation 23,340,000 41.62

Japan Trustee Services Bank, Ltd.

(Trust account 9)

2,417,100 4.31

Hideki Tomita 1,854,700 3.30

The Master Trust Bank of Japan, Ltd. (ESOP

trust account 75525)

1,709,465 3.04

The Master Trust Bank of Japan, Ltd. (Trust

account)

1,615,800 2.88

SSBTC Client Omnibus Account (Standing

proxy: HSBC Tokyo Branch)

1,577,914 2.81

Japan Trustee Services Bank, Ltd. (Trust

account)

1,391,700 2.48

State Street Bank and Trust Client Omnibus

Account OM02 505002 (Standing proxy: Mizuho

Bank, Ltd.)

806,800 1.43

The Bank of New York Mellon 140044 (Standing

proxy: Mizuho Bank, Ltd.)

646,703 1.15

Credit Suisse Securities (Japan) Limited 565,300 1.00

Existence of controlling shareholders

(excluding parent company)

―

Existence of parent company None


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Supplementary Information

―

3. Corporate Attributes

Stock exchange and section First Section, Tokyo

Fiscal year-end February

Industry Service

Number of employees at the end of the previous

fiscal year (consolidated)

More than 1,000

Sales during the previous fiscal year

(consolidated)

More than ¥10 billion but less than ¥100 billion

Number of consolidated subsidiaries at the end

of the previous fiscal year

Less than 10

4. Guidelines for Measures to Protect Minority Shareholders When Conducting Transactions with

Controlling Shareholder

―

5. Other Particular Conditions That May Materially Affect Corporate Governance

―


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II. Management Organization and Other Corporate Governance Systems concerning Management

Decision-Making, Execution and Supervision

1. Organization Structures and Organizational Operations

Organizational form Company with Audit & Supervisory Board

[Board Directors]

Number of board directors in Articles of

Incorporation

12

Term of office for board directors in Articles of

Incorporation

1 year

Chairperson of the Board of Directors President

Number of board directors (Revised) 6

Appointment of external board director Appointed

Number of external board directors (Revised) 2

Number of external board directors designated

as independent directors (Revised)

2

Relationship with the Company (1) (Revised)

Name Association Relationship with the Company*

a b c d e f g h i j k

Michiyo Maehara From another company

Eriko Tanabe From another company

*Choices regarding relationship with the Company.

*For (a) through (k), a circle (○) indicates the current or recent status of the individual, and a triangle (△) indicates the

past status of the individual.

*For (a) through (k), a filled-in circle (●) indicates the current or recent status of a close relative of the individual, and

a filled-in triangle (▲) indicates the past status of a close relative of the individual.

a. An executive of a listed company or its subsidiary

b. An executive or a non-executive director of the parent company of a listed company

c. An executive of a sister company of a listed company

d. An individual whose major business client is a listed company or an executive of such individual

e. A major business client of a listed company or an executive of such business client

f. A consultant, accounting specialist, or legal professional who receives a substantial amount of money or assets in

addition to the customary remuneration from a listed company

g. A major shareholder of a listed company (In the case that such major shareholder is a corporation, an executive


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thereof)

h. An executive of a business client (that does not fall under any of (d), (e), or (f)) of a listed company [This applies to

the individual only.]

i. An executive of a company whose external officers are mutually assigned [This applies to the individual only.]

j. An executive of a company to which a listed company donates products, services, or money (This applies to the

individual only.]

k. Other


Name Independent

director

Supplementary

information

Reason for appointment

Michiyo Maehara 〇 Nothing to note in

particular

After having extensively

promoted the establishment

of management bases in

businesses related to

personnel recruiting services,

Ms. Michiyo Maehara

currently serves as

Representative Director of

Liasu search Inc., which

provides employee training

programs and recruitment

consulting. Believing that, as

a female director, she can be

expected to continue

providing valuable advice in

response to changes in the

business environment of DIP,

which promotes

diversification of human

resources, and the recent

social situations, such as

diversity management, DIP

has judged her to be suitable

for the position of external

board director and nominated

her as candidate for the post.


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Ms. Maehara has also been

designated as an

independent director of DIP

since there is no risk of a

conflict of interest with

general shareholders as she

is not involved in DIP’s

business and does not

receive remuneration from

DIP as a consultant,

accounting specialist, or legal

professional in addition to the

customary remuneration.

Eriko Tanabe 〇 Nothing to note in

particular

Having engaged in multiple

projects centering on the IT

field at TEMPSTAFF CO.,

LTD. (currently PERSOL

TEMPSTAFF CO., LTD.),

including the construction of

websites and online systems

provided by said company,

Ms. Eriko Tanabe has

extensive management

experience. DIP believes that

she can be expected to

continue providing valuable

advice and perform oversight

and supervisory functions for

the Company by utilizing her

unique perspective as a

woman on businesses

related to personnel

recruiting services and the

internet in managing the

Company as well as in

product development. She


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can also be expected to

promote diversity

management including the

advancement of women in

the workplace. For these

reasons, the Company has

judged her to be suitable for

the position of external board

director and nominated her

as candidate for the post.

Ms. Tanabe has also been

designated as an

independent director of DIP

since there is no risk of a

conflict of interest with

general shareholders as she

is not involved in DIP’s


receive remuneration from

DIP as a consultant,

accounting specialist, or legal

professional in addition to the

customary remuneration.

[Optional Committee]

Existence of optional committee equivalent to a

nominating committee or compensation

committee (Revised)

Yes


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Establishment of Optional Committee, Composition of Committee Members and Attribute of Chairperson

(Revised)

Optional committee equivalent to nominating committee

Name of committee Nomination and Compensation Committee

No. of

committee

members

No. of full-

time

committee

members

No. of

internal

board

directors

No. of

external

board

directors

No. of

internal

experts

No. of

other

persons

Chairperson

3 0 1 2 0 0 External

board

director

Optional committee equivalent to compensation committee

Name of committee Nomination and Compensation Committee

No. of

committee

members

No. of full-

time

committee

members

No. of

internal

board

directors

No. of

external

board

directors

No. of

internal

experts

No. of

other

persons

Chairperson

3 0 1 2 0 0 External

board

director

Supplementary Information (Revised)

DIP has established a Nomination and Compensation Committee as an optional committee on the

nomination and compensation of board directors. The Committee comprises independent external

board directors in the majority and is chaired by an independent external board director. As an optional

advisory body to the Board of Directors, it deliberates matters concerning the nomination and

compensation of board directors, which it reports to the Board.

[Corporate Auditors]

Establishment of Audit & Supervisory Board Established

Number of corporate auditors in Articles of

Incorporation

4

Number of corporate auditors 4


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Cooperation among Corporate Auditor, Independent Auditor and Internal Audit Section

Corporate auditors hold meetings with the independent auditor on a timely basis to exchange opinions

and information as well as request a report from the independent auditor as needed. During the

process of audit and after the completion of audit by the independent auditor, the corporate auditors

receive a report on the observations of the audit. The corporate auditors exchange information with

the internal audit section whenever needed and request a report as necessary.

Appointment of external auditor Appointed

Number of external auditors 2

Number of external auditors designated as

independent auditors

1


Name Association Relationship with the Company*

a b c d e f g h i j k l m

Koichi Kobayashi Certified public accountant

Takashi Ejiri Lawyer

*Choices regarding relationship with the Company

a. An executive of a listed company or its subsidiary

b. A non-executive director or accounting advisor of a listed company or its subsidiary

c. An executive or a non-executive director of the parent company of a listed company

d. An auditor of the parent company of a listed company

e. An executive of a sister company of a listed company

f. An individual whose major business client is a listed company or an executive of such individual

g. A major business client of a listed company or an executive of such business client

h. A consultant, accounting specialist, or legal professional who receives a substantial amount of money or assets in

addition to the customary remuneration from a listed company

i. A major shareholder of a listed company (In the case that such major shareholder is a corporation, an executive

thereof)

j. An executive of a business client (that does not fall under any of (f), (g), or (h)) of a listed company [This applies to

the individual only.]

k. An executive of a company whose external officers are mutually assigned [This applies to the individual only.]

l. An executive of a company to which a listed company donates products, services, or money (This applies to the

individual only.]

m. Other


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Name Independent

auditor

Supplementary information Reason for

appointment

Koichi Kobayashi 〇 Nothing to note in particular Mr. Koichi Kobayashi

has been appointed as

external auditor since

the Company believes

he can be expected to

utilize the expertise and

experience he has

accumulated over many

years as a certified

public accountant in the

audit of the Company’s

overall management.

Mr. Kobayashi has also

been designated as an

independent director of

DIP since there is no

risk of a conflict of

interest with general

shareholders as he is

not involved in DIP’s


receive remuneration

from DIP as a

consultant, accounting

specialist, or legal

professional in addition

to the customary

remuneration.

Takashi Ejiri Nothing to note in particular Based on his legal

expertise he has

accumulated over many

years as a lawyer, Mr.

Takashi Ejiri strives to


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identify issues

concerning DIP’s

corporate governance

and actively makes

recommendations at the

meetings of the Board

of Directors and Audit &

Supervisory Board to

solve the issues.

Therefore, believing

that he can be expected

to make the necessary

recommendations at the

Audit & Supervisory

Board meetings, DIP

has judged him to be

suitable for the position

of external auditor and

appointed him to the

post. DIP believes that

he can appropriately

execute his duties as an

external auditor

because of his expertise

as a lawyer in corporate

legal affairs and

extensive knowledge in

corporate governance.

[Independent Officers]

Number of independent officers (Revised) 3

Other Matters related to Independent Officers

DIP and its subsidiaries (the “Group”) have established the Criteria for Impartiality of external officers

(external board directors and external auditors) as below. If an external officer does not fall under any

of the following, such external officer is deemed to be independent of the Group and have no risk of


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a conflict of interest with general shareholders.

1. An executive (as stipulated in Item 6, paragraph 3, Article 2 of the Regulation for Enforcement of

the Companies Act. Includes not only executive directors but also employees. Does not include

auditors.) of the Group or an individual who was an executive of the Group within the past 10 years

(for individuals who were a non-executive director or auditor of the Group at any point of time within

the past 10 years, 10 years prior to appointment of such post).

2. A major shareholder of the Group (an individual who holds 10% or more of total voting rights at the

end of the previous fiscal year), or an executive thereof.

3. An individual whose major business client* is the Group or an executive of such individual

4. A major business client* of the Group or an executive of such business client

5. An independent auditor of the Group or an individual in charge of the Company’s audit operations

as an employee of the independent auditor

6. A consultant, accounting specialist, or legal professional who receives money of more than 10

million yen per year or other assets in addition to the customary remuneration from the Group;

provided, however, that in the case that the individual receiving such assets is an organization such

as a corporation or a union, this shall be limited to an individual who is an executive of an

organization whose assets received from the Group account for more than 2% of annual income.

7. An individual who fell under any of 2 to 6 above in the past three years.

8. A relation within the second degree of an individual listed in any of 1 to 7 above (limited, however,

to a significant individual)

9. In addition to those stated in the above items, an individual with a special reason that prevents him

or her from fulfilling the duties as an independent external board director, such as a risk of a conflict

of interest with the Group

*A major business client refers to a client whose transaction amount in the previous fiscal year

accounted for more than 2% of consolidated sales for the year.

In addition to the above criteria, external officers are required to possess extensive knowledge and

experience necessary for auditing and supervising the status of Group directors’ compliance with laws

and business management.

[Incentives]

Implementation of measures on incentive

provision to board directors (Revised)

Adoption of performance-linked compensation plan


Compensation for directors consists of cash compensation as the base compensation and a BIP


19

(Board Incentive Plan) trust as a performance-linked stock compensation, which is aimed at

emphasizing the link between compensation and DIP’s share value and bolstering directors’

awareness toward contributing to medium/long-term performance and corporate value improvement.

The decision of the percentage of performance-linked stock compensation in directors’ compensation

is based on a comprehensive review of the medium/long-term ratio of performance-linked stock

compensation to annual compensation and the difficulty of achieving performance targets, after

conducting an objective comparison that takes DIP’s business scale into consideration, using a

remuneration database aggregated and analyzed by an external specialist institution.

Grantees of stock options (Revised) Employees


DIP grants stock options to its employees to invigorate them and strengthen the resolve among staff

to improve the long-term corporate value of the company.

[Directors’ Compensation]

Disclosure status Individual compensation is not disclosed.


The compensation of those whose total amount of consolidated compensation, etc. is 100 million yen

or more is individually disclosed in the Securities Report. Securities Reports and Business Reports

are available for public inspection on the Company’s website (available in Japanese only).

Existence of a policy for determining the amount

or calculation of compensation (Revised)

Yes

Disclosure of Policy for Determining the Amount or Calculation of Compensation

The basic policy of the compensation system for DIP’s board directors, which excludes external board

directors and auditors who are independent and are expected to perform oversight and supervisory

functions, is to share value with shareholders, taking into consideration a sufficient level for retaining

competent personnel while maintaining objectivity and transparency that enable full accountability,

and promote sustainable growth of the Company and medium/long-term increase in its corporate

value through a sound entrepreneur spirit. The amount of compensation is decided by a resolution of

the Board of Directors in view of the opinions of the Nomination and Compensation Committee, an

optional advisory body where independent external board directors account for a majority of votes.

[Executive directors]


compensation and stock options, which had already been granted to officers, and a BIP (Board

Incentive Plan) trust as a performance-linked stock compensation, which are aimed at emphasizing


20

the link between compensation and DIP’s share value and bolstering executive directors’ awareness

toward contributing to medium/long-term performance and corporate value improvement. The

decision of the level of performance-linked compensation is based on a comprehensive review of the

medium/long-term ratio of performance-linked compensation to annual compensation and the

difficulty of achieving performance targets, after creating an objective benchmark that takes DIP’s

business scale into consideration, using a remuneration database aggregated and analyzed by an

external specialist institution.

[External board directors]

Compensation for external board directors consists solely of cash compensation as the base

compensation, in principle, to ensure the effectiveness and independence of supervision and audit.

[Support System for External Board Directors (External Auditors)] (Revised)

The Administration Office is in charge of the support of external board directors. Support staff for

external auditors are assigned if requested. In this case, the auditor’s opinions are respected when

conducting personnel changes and evaluations of the assigned staff members. If briefings to external

board directors or auditors are required before meetings of the Board of Directors, the necessary

information is communicated by the Administration Office.

[Status of Individuals that Have Retired from Positions such as President]

Information including the names of counselors, advisors, etc. who previously held positions such as

president

Name

Title

and

Position

Description of

Position

Form and

Conditions of

Employment

(Full-Time or Part-

Time,

Paid or Unpaid, etc.)

Date of

Retirement

as

President,

etc.

Term

― ― ― ― ― ―

Total number of counselors, advisors, etc. who previously held positions

such as president

0

Other Matters

DIP has not appointed a counselor presently. It commissions a former director or auditor as counselor

through the required internal procedures if the Board of Directors finds it particularly necessary for


21

business. The counselor provides advice for and implements the business commissioned by the

Board of Directors concerning matters necessary for managing the Company. Commissioning a

counselor requires a resolution of the Board of Directors. The term of office is one year.

2. Matters related to Functions of Execution of Business, Audit and Supervision, Appointment and

Decisions regarding Compensation, etc. (Outline of the Current Corporate Governance System)

(Revised)

The Board of Directors, which is the management decision-making organ, currently consists of six

directors and holds meetings on a monthly basis, in principle, as well as when needed to discuss and

decide important management matters. Two of the six directors are external board directors, whose

recommendations from external standpoints are deemed to enhance supervisory functions toward

management.

Matters concerning business strategies are deliberated at regular Executive Officer Meetings

attended by executive directors as well as at councils at the headquarters consisting of department

heads and higher to ensure efficient decision-making by the Board of Directors, CEO, Chief Operating

Officer (COO), and heads of headquarters by recognizing managerial issues at an early stage.

The appointment of board directors and corporate auditors is decided by a resolution of the general

meeting of shareholders in response to a proposal of candidates nominated by a resolution of the

Board of Directors in view of opinions of the Nomination and Compensation Committee, an optional

advisory body where independent external board directors account for a majority of votes, after the

Executive President and CEO or another board director refers the candidates to the Board of Directors

after confirming that the candidates meet the basic policy for appointment stated below. The proposal

on the appointment of corporate auditors is submitted to the general meeting of shareholders after

obtaining the consent of the Audit & Supervisory Board.

[Board director]




In appointing external board directors, the candidates are required to be able to monitor and

supervise business management of the Company through important decision-making at the Board of

Directors meetings, oversee whether there is any conflict of interest between the Company,

management and controlling shareholders, and actively make recommendations on management

policies and management improvements in order to improve medium/long-term corporate value. The

basic policy is to appoint at least two independent external board directors upon considering and

deciding the appropriate balance of the diverse knowledge and experience expected of such directors.


22

[Corporate auditor]

DIP’s basic policy for appointing corporate auditors requires the candidates to possess extensive

expertise and experience as tax accountants, certified public accountants, lawyers, company

managers, etc., with the aim of reinforcing oversight and supervisory functions.

The basic policy of the compensation system for DIP’s management and board directors, which

excludes external board directors and auditors who are independent and are expected to perform

oversight and supervisory functions, is to share value with shareholders, taking into consideration a

sufficient level for retaining competent personnel while maintaining objectivity and transparency that

enable full accountability, and promote sustainable growth of the Company and medium/long-term

increase in its corporate value through a sound entrepreneur spirit. The amount of compensation is

decided by a resolution of the Board of Directors in view of the opinions of the Nomination and

Compensation Committee, an optional advisory body where independent external board directors

account for a majority of votes.

[Executive director]


compensation and a BIP (Board Incentive Plan) trust as a performance-linked stock compensation,

which is aimed at emphasizing the link between compensation and DIP’s share value and bolstering

executive directors’ awareness toward contributing to medium/long-term performance and corporate

value improvement. The decision of the percentage of performance-linked stock compensation in

directors’ compensation is based on a comprehensive review of the medium/long-term ratio of

performance-linked stock compensation to annual compensation and the difficulty of achieving

performance targets, after conducting an objective comparison that takes DIP’s business scale into

consideration, using a remuneration database aggregated and analyzed by an external specialist

institution.

[External board director and auditor]

Compensation for external board directors and auditors consists solely of cash compensation as

the base compensation, in principle, to ensure the effectiveness and independence of supervision and

audit.

With regard to management oversight functions, legality is audited by corporate auditor’s audits.

DIP has established an Audit & Supervisory Board that currently consists of four auditors, two of whom

are external auditors. The Company is also audited by an independent auditor. The certified public

accountants who were involved in auditing during the fiscal year ended February 2020 were as

follows:

Certified public accountants involved in auditing: Atsushi Fukuda, Hiroshi Uekusa


23

Affiliated auditing firm: KPMG AZSA LLC

Assistants involved in auditing: 7 certified public accountants; 7 others

The consecutive period of auditing is 10 years.

3. Reason for Selecting the Current Corporate Governance System (Revised)

DIP adopts a system of corporate governance carried out by the Board of Directors, corporate

auditors and the Audit & Supervisory Board, with the aim of simultaneously achieving sustainable

business operations and enhanced audit and internal control functions, while working to effectuate a

corporate management that is able to swiftly address changes in the management environment. DIP

has adopted this system because it believes that it is preferable for some of its board directors to be

involved in important business executions to make effective use of its managerial resources and

maintain sustainable business operations. At the same time, the system should, from the perspective

of ensuring management soundness, preferably enable non-executive directors to supervise

executive directors and corporate auditors to audit business management.

As DIP appoints independent external board directors as non-executive directors, it has set up a

support system, such as providing extensive prior briefings of the agendas of Board of Director

meetings, so that such directors can exercise their abilities and knowledge to the fullest extent. DIP

has also established an optional Nomination and Compensation Committee as an advisory body to

the Board of Directors. The committee deliberates and reports on matters concerning the nomination

and compensation of board directors in response to requests from the Board of Directors. The majority

of the members consist of independent external board directors to ensure the impartiality of the

committee.

With respect to audit functions, corporate auditors including independent external auditors attend

important meetings such as Board of Director meetings and conduct effective audits by cooperating

with the independent auditor and the Internal Audit and Control Office to ensure sound corporate

management. Furthermore, DIP has introduced an executive officer system to expedite decision-

making and ensure its smooth execution, contributing to the establishment of a system that is able to

swiftly address changes in the management environment.


24

III. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize General Meetings of Shareholders and Facilitate the Exercise of Voting Rights

(Revised)

Supplementary information

Early delivery of

notice of

convocation of

general meeting of

shareholders

DIP sends out notices of convocation of its general meeting of shareholders at

least 17 days prior to the date of the meeting to ensure that shareholders have

sufficient time to examine the agendas of the meeting, while simultaneously

making efforts to guarantee the accuracy of the information. It also discloses

the contents of the notice of convocation on TDnet and the Company website

at least six days prior to the shipment.

Setting the date to

avoid conflict with

other shareholders’

meetings

DIP sets the date of its general meetings of shareholders to avoid conflict with

other shareholders’ meetings.

Exercise of voting

rights by electronic

means

DIP uses the electronic voting system operated by Mitsubishi UFJ Trust and

Banking.

Participation in

electronic voting

platforms and other

initiatives to

improve

institutional

investors’ voting

environment

DIP participates in electronic voting platforms to facilitate the exercise of voting

rights by institutional investors and overseas investors.

Provision of notice

of convocation

(summary) in

English

DIP discloses a summary convocation notice in English on TDnet and the

Company website at least six days prior to the shipment of the notice,

simultaneously with the Japanese version.


25

2. Investor Relations (IR) Activities (Revised)


Explanation by

the representative

of DIP

Creation and

announcement of

disclosure policy

DIP has created an IR policy in order to engage in

constructive dialogue with its shareholders. Details of the

policy are posted on DIP’s corporate website.

(https://www.dip-net.co.jp/en/ir/attention/disclosure)

Holding regular

meetings for

analysts and

institutional

investors

DIP holds results presentations for analysts and institutional

investors on a quarterly basis on the day of the results

announcement.

Yes

Disclosure of IR

materials on

website

DIP has set up a page dedicated to IR on its corporate

website where the latest and past timely disclosure

materials, such as financial results, and materials related to

results announcements (presentation materials, fact sheets,

etc.) can be found.

(https://www.dip-net.co.jp/en/ir)

English versions of the timely disclosure materials and

materials related to results announcements are also

disclosed simultaneously with the Japanese versions.

(https://www.dip-net.co.jp/en/ir)

Establishment of IR

department (officer)

DIP has established the IR Section under the Corporate

Communication Division, Business Management

Headquarters as the department in charge of IR.

3. Status of Initiatives to Respect the Standpoint of Stakeholders (Revised)


Internal regulations

for respecting the

standpoint of

stakeholders

DIP’s brand statement, “One to One Satisfaction,” also serves as a guideline

for the Company to satisfy all of its stakeholders. DIP declares this brand

statement on its website, etc.

Promotion of

environmental

conservation

In an effort to conserve energy, DIP seeks to reduce environmental impact

through the optimization of room temperatures in its offices by abandoning

dress codes. The Company also measures, analyzes and discloses

https://www.dip-net.co.jp/en/ir/attention/disclosurehttps://www.dip-net.co.jp/en/irhttps://www.dip-net.co.jp/en/ir


26

activities and CSR

activities

greenhouse gas emissions and energy consumption of each office.

Social contribution activities include the “Raise the Salary” campaign that

began in May 2013 as an initiative to improve the treatment of definite-term

workers and vitalize the economy as a result. In January 2020, DIP carried out

the Baitoru Kids Program, which built on DIP employees’ experience and

knowhow gained through recruiting support activities to offer children an

opportunity to learn the meaning and rewards of working.

During the increase of COVID-19 infections since early 2020, DIP carried out

measures including free short-term job postings on Baitoru for client companies

and the “Expanding support against coronavirus” campaign, which highlighted

the unique measures by companies posting job ads to support workers against

coronavirus. For users, DIP offered economic support to those who became

unable to work due to contracting COVID-19. For employees, the Company

took measures to avoid the risk of transmission by recommending remote work

and off-peak commuting.


27

IV. Matters concerning the Internal Control System

1. Basic Concept and Status of the Internal Control System (Revised)

1. Ensuring Director and Employee Compliance with Laws, Regulations and Articles of Incorporation

(1) DIP has established a Basic Policy on Compliance and takes steps to instill the policy among all

board directors and employees to ensure that their execution of duties complies with laws, regulations

and the Articles of Incorporation as well as enabling them to act while respecting social responsibilities

and corporate ethics.

(2) DIP includes at least two independent external board directors in its Board of Directors to

strengthen the function of overseeing the fairness of execution of duties.

(3) The Legal Affairs Office is responsible for compliance and the maintenance and improvement of

the compliance system. Specifically, it offers regular training programs as well as creating and

distributing manuals to board directors and employees in order to foster knowledge and awareness

of compliance.

(4) DIP has developed a whistle-blowing system by establishing an external reporting channel as an

internal reporting system aimed at detecting violations of laws and the Articles of Incorporation quickly

and redressing them.

(5) DIP rejects all relationships with anti-social forces. It designates the Administration Office as the

responsible section for responding to anti-social forces and establishes rules for responses. It is also

prepared to respond resolutely to emergencies by cooperating with specialized external agencies

such as the police.

(6) The corporate auditors and the Internal Audit and Control Office work in conjunction with each

other to audit the status of the compliance system on a regular basis and report to the Board of

Directors.

2. Retention and Management of Information regarding the Execution of Duties by Board Directors

Information regarding the execution of duties by board directors shall be appropriately and surely

retained and managed over a prescribed period of time and also made searchable and viewable in

accordance with the Document Management Rules and other internal rules.

3. Rules and Other Systems for Risk Management

DIP establishes a system for business risk management based on the Corporate Risk Management

Rules. In the event of a critical situation in business activities, DIP sets up a task force under the

CEO’s command to make swift and accurate responses as well as a system to minimize loss or

damage. Against risks related to the handling of personal information, in particular, DIP has set up a

department and manager responsible for information management, who carry out trainings of

employees and internal audits on a regular basis as well as maintaining and improving the


28

management system based on the Privacy Mark and Information Security Management System

(ISMS) certifications DIP has already acquired.

4. Ensuring Efficiency in the Execution of Duties by Directors

Board of Directors meetings on a monthly basis to make important decisions on business execution.

Furthermore, the CEO, COO and heads of headquarters conduct careful and flexible decision-making

according to the decision-making authority stipulated in internal rules. In addition, the Company

ensures efficient decision-making by the Board of Directors, the CEO, COO and heads of

headquarters by deliberating matters at Executive Officer Meetings and councils at the headquarters

consisting of department heads and higher to recognize managerial issues at an early stage.

Efficient and swift business execution is pursued through the introduction of an executive officer

system and a headquarters system and in accordance with the Organization Regulations and Rules

on the Division of Duties and Authority.

5. Ensuring Appropriate Business of the Corporate Group consisting of the Company and its

Subsidiaries

(1) The Group will emphasize the importance of the Basic Policy on Compliance stipulated by DIP to

all employees in order to establish a compliance system for the entire Group.

(2) DIP will dispatch directors or auditors to subsidiaries, who will oversee and supervise the execution

of duties by directors at the subsidiaries.

(3) The business conditions between Group companies are compared with general business

conditions to prevent them from being significantly disadvantageous or arbitrary. Experts are

consulted as needed.

(4) The Internal Audit and Control Office conducts internal audits of subsidiaries to ensure the propriety

of their overall business.

(5) The Company and subsidiaries hold regular meetings to share important information on the

Group’s overall corporate management. The Company approves or receives reports on important

business executions at the subsidiaries in accordance with rules on subsidiary management.

6. Ensuring the Reliability of Financial Reporting

In order to ensure the propriety of the Group’s financial reporting, the Group establishes an internal

control system for valid and appropriate submission of internal control reports in accordance with the

Financial Instruments and Exchange Act. It also continuously evaluates whether the system functions

properly and makes amendments as needed.

7. Matters concerning Employees Who Support the Duties of Auditors where Required by Corporate

Auditors, the Independence of Such Employees from Directors and Ensuring the Effectiveness of


29

Instructions to Such Employees

DIP assigns personnel to support the execution of duties of the Audit & Supervisory Board or

corporate auditors as needed at their request or instruction. In such cases, the impartiality of such

personnel will be retained so that they will not be subject to instructions or orders from anyone other

than corporate auditors and to ensure the effectiveness of the auditors’ instructions. The opinions of

the Audit & Supervisory Board are respected when conducting personnel changes or evaluations of

such personnel.

8. Systems Designed to Enable Directors and Employees to Report to Auditors and Other Systems

concerning the Reporting to Auditors

All corporate auditors attend Board of Director meetings, in principle. At the Board of Director

meetings, matters for deliberation by important councils such as the Executive Officer Meeting are

also reported. In the event of an occurrence of a fact that causes substantial damage to the Group or

a risk thereof, or an occurrence of a situation that significantly discredits the Group, a material defect

or problem concerning the system or procedures of internal control, a violation of law or other illegal

act, or a material unjust act, the directors and employees of the Group immediately reports to

corporate auditors in writing or orally. Furthermore, corporate auditors are allowed to inspect the

minutes and proceedings documents of various meetings such as the Executive Officer Meeting and

request reports from the Group’s directors and employees. The Internal Audit and Control Office,

which is in charge of the whistleblowing system, reports to corporate auditors on the status of

whistleblowing within the Group on a regular basis.

9. Ensuring the Prevention of Unfavorable Treatment of Informants of the Preceding Paragraph Due

to Reporting

DIP stipulates in regulations and responds appropriately so that the Group’s directors and

employees will not be treated unfavorably due to making a report of the preceding paragraph to

corporate auditors.

10. Matters concerning Policies on the Handling of Expenses or Debts Resulting from the Execution

of Duties by Auditors, including Procedures for Advance Payment or Indemnification of Expenses

When a corporate auditor requests the Company indemnification of expenses resulting from the

execution of his/her duties pursuant to Article 388 of the Companies Act, the Company responds to

such request except in cases where it proves that such request is not necessary for the execution of

duties of such corporate auditor.

11. Ensuring Effective Auditing by Corporate Auditors


30

(1) Audit & Supervisory Board meetings are held once a month or more.

(2) In addition to Audit & Supervisory Board meetings, the corporate auditors hold meetings as

needed.

(3) Corporate auditors meet with the independent auditor or the Internal Audit and Control Office on a

timely basis to exchange opinions and information and request a report from the independent auditor

or the Internal Audit and Control Office as needed.

(4) Corporate auditors receive reports from external experts (lawyers, tax accountants, etc.) on risks

facing the Group in meetings with such parties.

2. Basic Approach toward the Exclusion of Anti-Social Forces and Establishment of Internal

Structures (Revised)

1. Basic Approach toward the Exclusion of Anti-Social Forces

DIP rejects all relationships with anti-social forces and groups that pose a threat to social order and

security.

2. Establishment of Internal Structures for the Exclusion of Anti-Social Forces

DIP has designated the Administration Office to supervise responses to anti-social forces and

appointed a person in charge of preventing undue demands. The Company has established a network

for cooperation with specialized external agencies such as the police and lawyers for its daily

information gathering and responding to any incidents that occur. Guidelines for addressing undue

demands have already been established but will be appropriately revised according to changes in the

environment. At the same time, the Company has added clauses for the exclusion of anti-social forces

in basic transaction agreements to prevent transactions with anti-social forces in its ordinary business

and to immediately stop any unforeseen transaction it discovers.


31

V. Others

1. Adoption of Anti-Takeover Measures

Adoption of anti-takeover measures No


―

2. Other Matters related to Corporate Governance System, etc. (Revised)

―

[Flow Chart (Reference Material)]

(Note) English documents are prepared as a courtesy to our stakeholders. In the event of any inconsistency

between English-language documents and the Japanese-language documents, the Japanese-language

documents will prevail.

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